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How to Avoid Debt with a Spending Plan

Back-to-school costs are pretty shocking when you consider that in 2017 the average Canadian household was expected to spend over $800 for back-to-school shopping. With costs that high, taking on additional debt is a likely scenario for many families.

But what if you could plan to avoid consumer debt?

In this podcast episode, we tackle four ways to steer clear of back-to-school debt.

On the list you’ll find helpful tips on how to create a debt-busting plan, strategies to avoid debt and overspending, money saving options, and ideas for including your kids in the budgeting and spending decisions.

July is a great time to start putting a plan in place to avoid debt, so let’s expand on what Craig Fryzuk, a Licensed Insolvency Trustee from our Calgary office, suggests about year-round budgeting.

Write it in bold. That is, start thinking of back-to-school expenses as a separate, and long-term, line item in your budget.

The costs are high in the summer, but it doesn’t stop there. Back-to-school costs occur every year, and they continue to spring up each month. Seasonal clothes, sports equipment, costs of field trips, pizza lunches, or year-end gifts all scream for attention as the school year goes on.

Think yearly. If you’ve had a child in school for a few years already, you can plan your budget by looking back on your costs from previous years. That will help you to budget appropriately and reduce any chance of debt during the year from budgeting too modestly. If this is the first year you’ll have the opportunity to track back-to-school spending, so be sure to take careful notes. It’ll help you plan your budget for the coming years.

Once you have a rough idea of what your total yearly costs might be, just divide by 12 to create a yearly budget to save for all your school spending. That could mean putting aside a couple hundred dollars a month, depending on your child’s activities and their school’s expectations.

Stretch your savings. If you end up with extra money left over in your budget at year’s end, all the better. You can roll that money over into the next year’s back-to-school budget, or, you can take the excess and put it directly into your child’s RESP, TFSA, or other long-term savings plan to help offset future education costs.

Don’t forget to research ways to save. Kerry Taylor’s back-to-school saving tips on her website Squawkfox can help you with your K-12 student and help you plan for the university costs to come!

The idea of adding yet another expense to your monthly budget might seem overwhelming. But when it comes to back-to-school spending, including it in your budget can help you avoid debt and even plan to keep costs lower than you otherwise would.

Do you consider school expenses a part of your budget? Tell us on Twitter. #BacktoSchool #DebtSolutions #FamilyFinances



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